Written by 
While there is much cheering in the United states with Republican Donald Trump winning the recent polls there, China and member-states of the Association of Southeast Asian Nations (ASEAN) have reasons to be worried. Or be very, very worried.
A research paper by Maybank Investment Banking Group (IBG) titled “Trump 2.0 Trade Policies:Turbulence Ahead” showed that a second Trump presidency will see the US escalate its trade war with China, among others, which can have an impact on ASEAN and beyond.
“Trump will likely escalate the trade and tech war with China; raise US tariffs on the rest of the world; and penalize countries which run a wide bilateral trade surplus. More protectionist US policies could dampen ASEAN exports, reduce FDI (forein direct investment), and produce a major deflationary shock as China’s excess supply is diverted,” the investment bank said.
“Trump will impose tariffs of 60% or higher on Chinese goods and a blanket 10% tariff on imports from other countries, which risks triggering a global trade war. The blanket tariffs will increase the incentive to onshore and could dampen FDI to ASEAN. A wider China-ASEAN US tariff gap may however continue to encourage relocation from China,” it added.
Among the vulnerable ASEAN countries under a Trump presidency would be Malaysia, Singapore and Thailand, because of their export dependence. While the Philippines was not mentioned, the country’s biggest export market is still the US.
Another concern under a Trump presidency are countries that have allegedly manipulative foreign exchange rules against the dollar.
“Trump 2.0 may target countries which manipulate their currencies or move away from the US standard. China, Vietnam and Singapore meet two of the three criteria for ‘currency manipulation” and are on the watch list. US policy options include export controls and import tariffs,” Maybank IBG said.
While the investment bank’s research did not include the Philippines, there are already worries of a Trump presidency negatively impacting the peso.
On Thursday, the peso closed at P58.73 against the greenback, weaker than midweek’s P58.661.
All told, Trump’s economic policies of bringing back jobs to the US and protecting American workers is seen triggering an effect beyond China.
“Trump 2.0 may revoke the MFN or Permanent Normal Trade Relations (PNTR) status for imports from China. This ‘nuclear option’ could unleash catastrophic damage to themultilateral trading system and significantly reset the economic playing field for all countries,” Maybank IBG said.
(PHOTO FROM ANADOLU)
Related